NEW YORK, NY--(Marketwired - Nov 3, 2014) - Fusion (
The PingTone transaction is Fusion's third acquisition in twenty-four months. It reflects the success of the company's strategy to grow through acquisition as well as organically, and meets its acquisition criteria in several significant ways. The acquisition will be immediately accretive to Fusion's EBITDA. In addition, it adds a loyal and growing enterprise customer base with high ARPU, positions the company to impact organic growth with a talented team of managers and staff to further help the company scale, provides a strong cross-sale and up-sale opportunity and can be tightly integrated into the company's existing infrastructure.
Acquisition Highlights
- Strong Financial Profile
- LTM Revenue of $8.1 million as of June 30, 2014, over 90% of which is recurring
- Pro forma adjusted EBITDA of $2.1 million
- Over 62% gross margin
- 12% growth rate first nine months 2014 over same period of 2013
- Growing Customer Base
- More than 24,000 customer endpoints and 250 business customers concentrated in the energy, healthcare, finance, emergency response and national defense industry segments
- Expands Fusion's reach into the government sector and the Washington, D.C. region
- Higher than industry standard ARPU (Average Revenue per User) of over $2,900
- Lower than industry standard churn of 0.5%
- Adds an important component to the company's organic growth strategy by contributing a successful Direct Sales team to complement the company's own distribution network of approximately 500 active sales partners
Upon completion of the integration with PingTone, Fusion expects to achieve approximately $950,000 in annual cost synergies and additional revenue growth from the cross-sale and up-sale of the companies' combined products and services. The expected performance of the combined companies, and the integration of PingTone's experienced and highly skilled team of professionals, including a strong direct sales force, will allow Fusion to accelerate its organic growth plans as the company continues to pursue its acquisition strategy.
The aggregate purchase price for the transaction is $10.0 million (net of cash received), consisting of $7.5 million in cash and $2.5 million in common stock of Fusion. $5.0 million of the purchase price was funded by additional financing provided through the issuance of 5-year senior notes to Fusion's existing lenders -- Praesidian Capital, Plexus Capital and United Insurance Company of America.
Matthew Rosen, Fusion Chief Executive Officer, said, "Both companies are excited about the value we can create as we come together through this acquisition. It has been a pleasure to work on this transaction with Shelby Bryan, PingTone's Founder, Chairman and Chief Executive Officer. With decades of ground-breaking experience in communications, and having built, grown and sold successful companies as an entrepreneur and venture capitalist, Shelby's confidence in the combined company is especially gratifying. We're delighted that PingTone's shareholders share our vision in the company and look forward to increasing their value as we build the future."
PingTone's Shelby Bryan added, "We are impressed with Fusion's exceptional management team and their strategic plans for growing the business in the rapidly expanding cloud services industry. We believe in their mission to be the industry's single source provider for companies looking to access the many benefits the cloud brings to the enterprise. That is why, as PingTone shareholders, we are taking common stock in Fusion as part of the consideration. We look forward to participating in the combined companies' growth by lending active support to achieve its goals."
Don Hutchins, Fusion's President and Chief Operating Officer, said, "PingTone's success in delivering the highest standards of quality and support is evident in the low attrition and customer loyalty of its enterprise customers in the Washington, D.C. area, all of whom demand advanced solutions and service excellence. We believe that the combination will accelerate the companies' organic growth, with Fusion's nationwide cloud network and advanced cloud services platform extending PingTone's geographic reach and expanding its cloud solutions offering. In addition to adding significant contracted monthly recurring revenue, a growing base of loyal enterprise customers, and positive adjusted EBITDA, the acquisition adds a very experienced and highly qualified management team, direct sales organization and staff to Fusion's own experienced organization, helping us expand our ability to support an ever growing customer base."
Q Advisors LLC, a Denver and San Francisco based investment banking boutique, acted as exclusive financial advisor to PingTone.
Use of Non-GAAP Financial Measurements:
The company believes that EBITDA (earnings from continuing operations before interest, taxes, depreciation and amortization) is useful to investors because it is commonly used in the communications industry to evaluate companies on the basis of operating performance and leverage. The company also believes that EBITDA provides investors with a measure of the company's operational and financial progress that corresponds with the measurements used by management as a basis for allocating resources and making other operating decisions. Adjusted EBITDA provides an adjusted view of EBITDA that takes into account certain significant non-recurring transactions, if any, such as impairment losses and professional fees associated with pending acquisitions, which vary significantly between periods and are not recurring in nature, as well as certain recurring non-cash charges such as stock-based compensation. Although the company uses adjusted EBITDA as one of several financial measures to assess its operating performance, its use is limited as it excludes certain significant operating expenses. EBITDA and adjusted EBITDA are not intended to represent cash flows for the period presented, nor have they been presented as an alternative to operating income or as an indicator of operating performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with Generally Accepted Accounting Principles ("GAAP").
About Fusion
Fusion is a leading provider of integrated cloud solutions to small, medium and large businesses. Fusion's advanced, high availability cloud service platform enables the integration of leading edge solutions in the cloud, including cloud communications, cloud connectivity, cloud computing and other cloud services such as storage and security. Fusion's innovative, yet proven cloud solutions lower our customers' cost of ownership, and deliver new levels of security, flexibility, scalability and speed of deployment. For more information, please visit www.fusionconnect.com.
Forward Looking Statements:
Statements in this press release that are not purely historical facts, including statements regarding Fusion's beliefs, expectations, intentions or strategies for the future, may be "forward-looking statements" under the Private Securities Litigation Reform Act of 1996. Such statements consist of any statement other than a recitation of historical fact and can be identified by the use of forward-looking terminology such as "may", "expect", "anticipate", "intend", "estimate" or "continue" or the negative thereof or other variations thereof or comparable terminology. The reader is cautioned that all forward-looking statements are speculative, and there are certain risks and uncertainties that could cause actual events or results to differ from those referred to in such forward-looking statements. This disclosure highlights some of the important risks regarding the company's business. The primary risk of the company is its ability to raise new and continued capital to execute its comprehensive business strategy. There may be additional risks associated with the integration of businesses following an acquisition, concentration of revenue from one source, competitors with broader product lines and greater resources, emergence into new markets, the termination of any of the company's significant contracts or partnerships, the company's ability to comply with its senior debt agreements, the company's inability to maintain working capital requirements to fund future operations or the company's ability to attract and retain highly qualified management, technical and sales personnel, and the other factors identified by us from time to time in the company's filings with the Securities and Exchange Commission, which are available through http://www.sec.gov. Statements in this press release relating to the projected revenues, EBITDA, cost-synergy savings and other forecasted benefits of our acquisition of PingTone are "forward-looking" statements and are based upon certain assumptions that may or may not prove to be accurate; and if inaccurate could cause our actual results to differ materially from our projections. However, the risks included should not be assumed to be the only things that could affect future performance. The company may, among other things, also be subject to service disruptions, delays in collections, or facilities closures caused by potential or actual acts of terrorism or government security concerns.
Contact Information:
Fusion
Laura Nadal
212-389-9720
Michael Mason (Investors)
Allen & Caron Inc
212-691-8087